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6 (a) State one drawback to Mind Candy of organic growth - Edexcel - GCSE Business - Question 6 - 2019 - Paper 1
Question 6
6 (a) State one drawback to Mind Candy of organic growth. (b) Outline one method Mind Candy could use to promote its new app. In order to raise the £1.2 million of... show full transcript
Worked Solution & Example Answer:6 (a) State one drawback to Mind Candy of organic growth - Edexcel - GCSE Business - Question 6 - 2019 - Paper 1
Step 1
Step 2
Outline one method Mind Candy could use to promote its new app.
Answer
One effective method Mind Candy could use to promote its new app is through social media marketing. By leveraging platforms like Instagram and Twitter, they can reach a large audience quickly, engaging potential users with interactive posts and advertisements.
Step 3
Justify which one of these two options Mind Candy should choose.
Answer
Mind Candy should consider choosing retained profit over share capital for several reasons. First, using retained profits does not involve giving away any ownership stake in the company, which means that existing shareholders maintain control. Additionally, it avoids the costs associated with issuing new shares, which can be significant.
Furthermore, relying on retained profits reduces the risk of taking on further financial obligations, as debt can place a strain on cash flows, particularly if the business faces downturns. This option also signals financial independence to stakeholders, enhancing the company's standing in the market.
On the other hand, while share capital can provide immediate funds, it dilutes ownership and may complicate decision-making. Therefore, opting for retained profits is not only financially prudent but also reinforces Mind Candy's stability and growth potential.